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On Smith's ambiguities on value and wealth

Meacci, Ferdinando (2010): On Smith's ambiguities on value and wealth. Forthcoming in:

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Abstract

Ricardo’s criticisms of Adam Smith on value and wealth have been sometimes rejected and sometimes accepted in the period following the publication of his Principles. By contrast, they have been mostly ignored in the recent revivals of Ricardian economics both in the branch concerned with value and distribution and in the branch devoted to wealth and equilibrium growth. This paper intends to fill the gap between these two branches by revisiting Smith’s link between value and wealth in the light of Ricardo’s criticisms. This is done in two steps. The first step is provided in Part I and deals with Ricardo’s criticisms i) of Say’s and Lauderdale’s criticisms of Smith on this issue, and ii) of Smith’s and Malthus’ arguments on the related issues of rent and of the “annual produce of the land and labour of a country”. The second step is provided in Part II. The aim of this Part is to dissolve Smith’s terminological inaccuracies or contradictions by disentangling them from the analytical foundations of his system of thought. This is done by re-examining Smith’s arguments on value and wealth in the light of two distinctions. One runs between the two points of view –of an individual and of society– which underlie the whole of his system of thought. The other is put forward by Smith himself in a neglected passage of the Wealth and runs between the notions of “work done” and “work to be done”. Both distinctions are then utilized to revisit the principle of exchangeable value as command of labour in the economy as a whole and in the sense of work to be done. The paper is closed by arguing that this principle is needed for supporting the idea of a permanent increase in the natural price of labour (in Smith’s rather than in Ricardo’s sense) in economies exposed to a continuous process of accumulation.

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